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Tuesday, 16 January 2018 14:06

Individual mandate repealed for 2019

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For starters, the individual mandate is still in effect for 2018, meaning that employees may have to pay a sharp tax penalty of 2.5% of their income if they do not have health insurance. Early reports that this is no longer in place are false.

Even after the individual mandate is eliminated in 2019, the individual market, federal subsidies and Medicaid expansion (32 states and the District of Columbia implemented this) will all still be in place, barring further congressional action.

How might this affect employer sponsored plans?

Initially, employers who do not contribute 100% of the premium for employee’s might see a drop off in enrollment.  Since there will be no more mandate in 2019 some employees might take a risk, even though the employer pays some of the premium, that it might not be worth it to them to carry health insurance.  This may cause an employer’s risk pool to worsen slightly, which could raise group rates slightly over time. 
 
By far, however, we anticipate most of the heavy premium increases will be seen in the individual market rather than in group insurance.  Some of the young and healthy individuals only bought plans on the individual market due to the mandate. When they drop out, that raises the rates for those remaining. 

Why was the mandate in place to begin with? 

The thought behind the individual mandate is to guarantee that not just sick people are buying health insurance.  By spreading the insurance risk pools, to include a mix of young and old, healthy and sick, premiums go down in the overall market and are more fair to all. The Congressional Budget Office estimates that 13 million fewer Americans will be insured in 2027 after the removal of the mandate.

How much will premiums increase?

The congressional budget office (CBO) predicts premiums would see a rise of around 10% without the individual mandate as the exchange is left with a sicker consumer pool.  

Who will be affected the most?  

For most Affordable Care Act (ACA) enrollees (those making between 100% and 400% of the federal poverty level), an accompanying increase in federal subsidies will make up for higher premiums. This year, 84 percent of people who buy an individual exchange plan will receive a subsidy to help pay for some or most of their insurance premium.  These people are likely to still sign up for ACA coverage even if the premiums spike.
 
Those making above that income level (above $48,000 for an individual, or $98,000 for a family of four) will have to face the full burden of the premium increase.

What about pre-existing conditions?

Protections for people with pre-existing conditions remain in place. Even though that’s good news for anyone who is or may get sick, it complicates the risk-pool issues created by the individual mandate repeal. 

Will there be an individual exchange in 2019?

No matter what, the year ahead will be tough for insurers, tough for consumers who have fewer choices, and toughest of all for people who don’t qualify for subsidies will bear the full brunt of premium increase.  But experts believe the exchanges specifically and the ACA in general will continue, which is more than some thought a few months ago.  
 
Read 304 times Last modified on Tuesday, 27 February 2018 11:40